What do most Americans need that few have? A sound plan for long-term care.
The majority of Americans will, at some point, find themselves temporarily bedridden or disabled because of illness or injury. Some may be unable to care for themselves for an extended period of time. Even the healthiest could find themselves in need of long-term care, particularly in old age.
Unfortunately, a recent survey shows that most people—73% of those questioned—have no awareness of the true cost of long-term care. Even worse, only 22% think they will ever need it. In reality, as many as 70% of today's 65-year-olds will need long-term care in the future.
Because they do not appreciate the risk and expense involved, few Americans have made adequate plans, nor have they discussed the issues with a legal or financial advisor. And yet, while conversations about illness and disability are unpleasant, they are essential. It is critical to consider risks well in advance and find a strategy that will work, if and when the time comes.
Some of the options available include:
- Long-Term Care Insurance
- "Hybrid" products combining long-term-care insurance with a life insurance policy or annuity
- Medicaid
- Self-funding
Long-term care insurance can be costly, and not everyone is eligible to purchase it. Plans may contain exceptions and waiting periods and usually do not cover all expenses. Still, they provide a financial cushion. Hybrid plans may offer more flexibility and accomplish other financial objectives. Either could be a valuable part of a long-term contingency plan.
Medicaid is a way to fund long-term care, but with major disadvantages. Recipients must spend down all assets before Medicaid benefits become available and must give up control over their care. The location and quality of care may not be to their liking.
"Self-funding" is an option many choose—or wind up with for lack of planning. To pay for your care out of your savings, you will need a substantial amount of wealth on tap. You will most likely also need a family member to help with caregiving and coordination of your nursing and medical treatment, unless you hire a professional care manager, whose services can be costly. A family member who assists will have to make large sacrifices of time, potentially jeopardizing his or her own career and financial stability.
The first stage of planning for long-term care is to have a serious discussion with your professional advisors. You can discuss your level of risk, your possible funding solutions, and the steps you need to take now and down the road. A skilled elder law attorney can help you find an approach that ensures your future well-being and protects your assets.
